28 April 2010

Mexico shows its Brazil envy

MEXICO CITY – President Felipe Calderon raised eyebrows earlier this year, when he admonished those gathered at a meeting of the nation’s top diplomats to speak better of Mexico – in spite of the negative perceptions abroad generated by violence from the ongoing war on narcotics trafficking cartels and the 2009 outbreak of the H1N1 virus.

To emphasize his point, he mentioned Brazil, saying the emerging South American power is perceived abroad in far more favorable terms than Mexico and is spoken of well by its own citizens.

“I have never as a politician nor as president of the Republic … heard a Brazilian speak badly of Brazil. And, yet, I’ve heard many Mexicans speak badly of Mexico to the world,” he said.

“The international perception is that Mexico is in chaos … and Brazil is some sort of paradise.”

The comments were perhaps a reflection of Calderón’s frustrations in Mexico, where a three-year crackdown on narcotics trafficking cartels has claimed more than 18,000 lives, the Mexican economy has lagged – dropping 6.8 percent in 2009 – foreign direct investment has been halved over the past year and his agenda for state, labor and economic reforms were dealt a blow in the midterm elections.

But the comments reflected an envy of Brazil often repeated in Mexico.

While Mexico suffered through a miserable 2009, Brazil emerged from the global economic downturn more quickly. It also continued wielding increased regional influence – at time Mexico was mending fences other countries in Latin America such as Venezuela and Cuba – with its peacekeeping presence and Haiti and involvement in the Honduras political crisis.

Even Brazil being awarded the 2016 Olympics was another point of envy for some in Mexico.

First Lady Margarita Zavala remarked in February.

“In Brazil, there are 25 homicides for every 100,000 inhabitants. We have less than half (the homicide rate) of Río de Janeiro … and they won the Olympics and (2014) World Cup.”

Ironically, the Mexico Football Federation withdrew its early bids for the 2018 and 2022 World Cups due to funding issues.

“The average Mexican is happy for Brazil’s success, but for the elites, there’s some jealousy,” said Mexico City pollster Dan Lund, president of the Mund Group.

Along with that jealousy comes fear.

Mexico and Brazil have started exploring a free-trade agreement that some in Mexico have promoted as way of lessening the country’s dependence on United States – the destination for some 80 percent of Mexican exports.

But a 2009 poll released by a major business group found 95 percent of its members uneasy of such a deal. The fear comes even though some Mexican companies such as telecommunication giants Telmex Internacional and América Móvil – both controlled by the world’s richest man, Carlos Slim Helú – have performed strongly in the Brazilian market.

Much of Mexico’s dependence on the U.S. market is attributed to geography, but also the 1994 NAFTA agreement. The timing of NAFTA’s arrival was unavoidable for some political observers, given the current Brazil-envy on display.

“While Brazil was consumed by a deep crisis (in the early 1990s) Mexico sold itself as the best emerging market on the planet,” political analyst Juan E. Pardinas wrote last fall in the Mexico City newspaper, Reforma.

“For us, the forecast was a sweet promise; for them, a black cloud. Today, our respective national futures are no longer what they were before.”

Pardinas and other observers attribute the turnaround to economic reforms in Brazil and pragmatic governance.

Over that same time period, Mexico has been mired in political gridlock – especially since 1997, when the lower house of Congress slipped into opposition control. It has remained split between the three main parties ever since. Additionally, few significant reforms were approved during the 2000-2006 administration of President Vicente Fox.

Calderon, meanwhile, has won reforms for the criminal justice system, taxation and the energy sector, but many political observers say those overhauls were inadequate.

“As a country, we’ve taken half steps,” said Eduardo García, publisher of the online business publication, Sentido Común.

“We have a democratic system, but it’s very divided.”

Those divisions were on display during the 2008 debates to reform the energy sector – one key area in which Brazil and Mexico have taken disparate development approaches.

The Mexican reforms allowed for increased private sector participation in the state-run oil concern, Pemex, but failed to address deep-seated problems such as the dominance of the oil workers’ union or provide sufficient incentives for outside players to help discover and exploit new petroleum fields – at a time when Mexican production was in decline.

Pemex lacks the technology to exploit deep-water fields in the Gulf of Mexico, which are though to hold enormous reserves. Meanwhile, Brazil’s state-controlled oil company, Petrobras, has been hailed as a world-class company and successfully exploited deep-water reserves.

Pardinas sees lessons for Mexico – where keeping the oil industry in government hands is a pillar of national sovereignty – in Brazil’s management of its petroleum sector, but also hope the country can turn itself around like Brazil has over the past two decades.

“Brazil’s success is a motive for envy. However, its successes give us hope that history is not destiny and the future is not a mechanical repetition of the present,” he said.